Understanding your credit report is an important step in taking ownership of your financial success. It would help if you thought of your report as a tool to prove to lenders, service providers and in some cases employers, that you are financially stable and responsible. It basically lets other people know they can trust you with their money. Here are some reasons for checking your credit report a couple of times a year is important.
Many of us still believe the misconception that checking your credit report will have a negative impact on your score. On the contrary, checking your own credit report does not count as a hit against your score and is important to help against the following reasons.
In Canada, we have two reporting agencies (Equifax and TransUnion) that report all credit you have extended. It is important to check to verify the information they both have on your file, sometimes items get reported incorrectly. By finding the errors in your report first, you will avoid running into any discrepancies when we request your report. Having errors on your report can bring down your score and take many months to fix.
By reviewing your report, you also protect yourself against identity theft. If your information is compromised and credit was extended without your authorisation, seeing your report first hand would allow you to catch any errors possibly before being contacted by a third-party agency. If you do see any information on your credit report, you believe shows someone is taking out credit in your name, please contact your municipal or provincial law enforcement right away.
Having a strong credit report will help get better rates when applying for a mortgage. The banks look at the overall report and how you manage borrowing and debt when they are deciding to lend money. They look at the score, the balance to limit ratio, any late payments and if you have had difficulty managing credit in the past.
Checking and understanding your report is very important to know and where you stand in the lending world. Your score is among the most important steps towards building a better financial future. It shows where you can start working to build or rebuild your credit. It doesn’t hurt you to pull your report if you use the links below. These links are a soft inquiry and wont negatively impact your score.
Here is how to obtain your FREE credit report with Equifax and TransUnion:
I am always here for advice on how to build a strong report and explain how the banks use this information when approving loans.